Value added tax
The financial benefit of building your own house is commonly quoted as one of the reasons people first decide to ‘self-build’. However it is not just the material cost saving that are advantageous, there is also a significant saving available through VAT refunds. One of the most pleasant tasks of building your own home is making a VAT repayment claim at the end of the build!
If you are constructing a new building, you may be able to claim back the VAT paid on the building materials and labour used in the construction of your home - bricks, joinery, plumbing, tiles etc. practically everything that forms a permanent part of the structure.
You can make a claim if the new house is an ordinary private domestic residence and you will need detailed proof of VAT paid on all the goods for which a claim is to be made. The claim must be made within three months of the building being completed and you only get one chance to claim, and so you need to get it right first time.
You can make a claim for most of the goods and materials bought from a VAT registered supplier which are incorporated into the building or the site.
You cannot claim for furniture, carpets, curtains, white goods, trees and plants, nor for professional services, equipment hire, transport of materials and tools used. HM Revenue and Customs publish a very good guide on this matter - VAT Refunds for do-it-yourself Builders, dated January 1996 and under Notice 719. This clearly explains who is eligible, how to make a claim and what can be claimed. If you have any questions not answered by the booklet, it is always worth ringing the office for advice. There are some peculiar exceptions, for example burglar alarms qualify, but door bells do not!
You can only claim your VAT refund once the project is completed, so it is important to keep careful records, as forgotten items cannot be claimed at a later date. Keeping all your invoices together certainly makes life easier when you finally complete your claim form.
New buildings intended for use as a dwelling are normally eligible for a VAT refund. Conversions completed since 21 July 1994 are eligible provided that the previous use of the dwelling has been non residential (such as barns or disused railway stations).
Oddly, you may also claim for a building which was a residential establishment before 1st April 1973, as long as it has not been used as one since.
A VAT invoice must show the supplier’s VAT registration number and the price and description of the goods or services you have bought. If the total is more than £100 your name and address must also be included on the invoice. Your local Howarth Timber and Building Supplies merchant’s invoices include all this information as a matter of course. The VAT authorities guarantee payment within 30 days of receiving your completed forms - provided that there are no queries relating to your application. Whilst the Customs & Excise are extremely helpful, where the project is particularly complicated it is best to employ a VAT Consultant to make the claim for you. The consultant will be conversant with the rules and regulations, know the procedure as well as the tricks of the trade and make sure that you have not forgotten any items.
National VAT Advice Centre Tel: 0845 010 9000. For further info visit the H.M. Revenue & Customs website.
For your local office look under “H.M. Revenue & Customs” in the phone book or search online.